What’s Going To Happen to the Nail Salon Industry Now?

The New York Times’s explosive investigative series, which exposed exploitation and serious health risks for workers in the nail salon industry in New York City, raised many questions, some of which may be unanswerable for a long time. What seems certain, though, is that the New York City of the future will not have a nail salon on every block.

As of 2012, there were some 2,000 nail salons in New York City, a number made possible by underpaying — and in some cases, not paying at all — the women who work there. Governor Cuomo ordered emergency protections for workers and eventual safety inspections of nail salons, and once these start in earnest, there will likely be closures. The model is not sustainable as it stands.

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Fashionista’s own Lauren Sherman recently tweeted:

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She may be on to something.

What seems obvious is that it’s going to rightly cost consumers more for nail services going forward, whether you start tipping your local nail tech a ridiculously high percentage or you go to a more above-board legal salon. Much like the rise of the $35 fitness class, the age of the high-end luxury nail salon may be upon us. In a market like NYC, where women are especially wellness conscious and think nothing of spending $8 on juice, selling a safe, socially conscious nail salon doesn’t seem all that far-fetched. In fact, the model is there, and successful already, in at least two different NYC nail salons.

Tenoverten, the nail salon beloved by fashion girls all over the city, opened about five years ago in the TriBeCa neighborhood. The brand now has two additional New York locations, with another one slated to open in the fall. Its first out-of-state outpost will open in Austin, Texas this summer. Regular manicures are $25, while a “quickie” version costs $15. (Compare this to my local salon, where a mani/pedi combo costs $30). According to co-founder Adair Ilyinsky, interest in the salon chain peaked over the weekend after the Times articles broke.

Paintbox, a year-old high-end salon that specializes in nail art, also experienced a surge of interest following the Times articles. According to founder Eleanor Langston, Paintbox’s website had four to five times the amount of normal traffic and appointment bookings doubled. A manicure there costs $35, and the price increases if you add nail art or gel.

Both businesses are booming, despite the higher price points. “We recognize that some [people] can’t come every week because it’s cost prohibitive, but I think that, particularly in New York City, people are savvy and are willing to pay a premium for [quality,]” Ilyinsky says. “We’re not jacking up the price just to make a lot of money, and I think they see that so they feel like it’s justified, not that you’re paying for nothing.”

Both salon owners point to their high-end products, impeccable sanitary conditions, high level of customer service and active safety measures as contributors to the higher prices. And there’s also the hot button labor issue. According to Ilyinsky, Tenoverten’s employees are paid a base salary that’s “above minimum wage,” plus they get overtime, paid sick leave and a holiday bonus. At Paintbox, there are hourly as well as salaried employees, and Langston pays them for both training time and holidays. Full-time employees get paid vacation and health care benefits; many employees even own shares in the company. Both salon founders told me they’re eyeing expansion. At this point, both have private investors and they are still very much small business entrepreneurs. In light of the nail salon situation now, though, their respective success could bring investor interest.

Interior of a MiniLuxe salon. Photo: MiniLuxe

One company has already demonstrated that a higher end chain concept for nail salons can work. MiniLuxe, founded in 2007, is a chain of 10 nail salons in Boston and now Dallas. Tony Pino, MiniLuxe’s director of business development, says that CueBall, the investment company which founded and backed the salon chain, was looking for an industry it could “Starbuck.” “We were saying, ‘What is something that is big but not good, that kind of succeeds in spite of itself?” Yep, nail salons, ripe for turning into Frappuccinos. According to a January Times article, the company raised $23 million in venture capital which it used to expand to Dallas. Pino says that the company hopes to double the amount of stores by the end of this year. He’s non-committal about tackling New York. “We could build a hundred stores, but we think it’s important to be patient and do things right and we’ll expand to other markets in due time,” he says.

MiniLuxe, like the two NYC salons, distinguishes itself with a high level of hygiene, service quality (the company custom designed all of its own tools and boasts a standardized 35-step mani), safety and air quality and, yes, ethical labor practices. Pino notes that nail techs make $40,000 to $60,000 per year, thanks to a combination of an hourly wage that averages $15/hour, tips that average $7/hour and commission on retail sales in the shop. A manicure costs $20.

But it might not be easy to scale or even make a profit in nail salons. Pino notes that the business is capital intensive, takes a long time to see a return, and is operationally complex. “This is a very hard business to be in,” Pino says. “It’s taken us a long time to start to get things right. We initially had to be patient. Most people choose where to go get a service based on convenience and price. Eventually people started to understand that coming to MiniLuxe meant something different.” Due to the horrifying issues that have come to light, that part will likely be easier for future investors or entrepreneurs in this space to overcome since consumers now have a better understanding of what that low price is actually paying for. But potential investors be warned: "We’ve been in the space a long time and we love it, but it’s not a space where you would go to make quick money," Pino says.

Finally, this situation could be a boon for beauty on-demand services. GlamSquad, which had previously offered in-home hair styling and makeup application, just added nail services to its roster a few weeks ago. A rep for the company declined to comment for this story, but I would suspect the timing of its nail launch feels pretty fortuitous right about now. At $35 for an in-home manicure, it’s not that much more than Tenoverten, and is the same price as a Paintbox mani. Manicube, the in-office service, could capitalize even more on this with its reasonably priced $12 to $20 manicures, though a limiting factor is that it only offers services via office buildings right now. If more traditional neighborhood salons do shut down and convenience becomes an issue (for example, I love Paintbox, but it’s a haul for me to get there from where I live), the on-demand services could fill that niche pretty easily.

What all of these businesses have in common is that they've looked beyond the traditional nail salon model, which is obviously broken. The industry, especially in New York, still has a lot of cleaning up to do, but that could mean a happy ending for businesses that are doing the right thing. “We’re happy there are going to be rules and regulations because it’s hard to compete when they aren’t following the rules and you are,” Tenoverten’s Ilyinsky says. “It’s nice that it will be an even playing field business-wise, and also because we feel so passionately about how employees are treated.”

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Anyone who's ever ridden in a cab with me knows that I'm a stickler for good customer service. (I.e., if a driver is incompetent I get real annoyed.) I'm like this about pretty much everything, from restaurants to department stores. (No one--I mean no one--who works at Uniqlo knows where anything is. Unless they've been promoted to the +J department. There, I've noticed, you can't be lazy. But I digress.)
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